ChexSystems is a consumer reporting agency that gives information to banks and credit unions when they’re deciding how risky a potential customer could be.
Think about your current and any former banks you have held accounts with.
Did you have any history of bounced checks or outstanding overdraft fees? Or maybe you simply stopped using the account due to a zero balance but never officially closed the account?
Those are examples of negative behaviors that banks would report to ChexSystems. An unfavorable report on ChexSystems may prevent you from opening a new bank account or savings account, thus delaying your journey to financial stability
How to Dispute Errors on Your ChexSystems Report
Step 1:Get Your ChexSystems Report
If you haven’t done so already, obtain a free copy of your ChexSystems report from the ChexSystems website, ChexSystems.com. You are legally entitled to a free report annually.
You are also entitled to a free report anytime a bank or credit union has refused to open an account for you in the past 60 days because of information in ChexSystems.
Once you have your report in hand, review the information carefully to see if there is any inaccurate information listed.
You can also request a report by calling their toll-free number at (800)428-9623.
If you prefer to contact ChexSystems by mail, you can write them at:
Chex Systems, Inc. Attn: Consumer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125
Step 2: Open a Dispute with ChexSystems
Once you have your report, reference the information that you wish to challenge using our sample dispute letter Chexsystem Dispute Letter 1.
You must send the letter via certified mail with the return receipt requested and keep a copy on file for your records. This simple step provides proof of the date that your dispute was received.
Under the Fair Credit Reporting Act (FCRA), ChexSystems has 30 days to provide verification of the negative mark or delete it from your report.
Step 3: Follow-up on Your Claim
If you hear back from ChexSystems within the 30-day time frame with a generic confirmation of the negative item, you’ll need to request verification from the original bank as well as ChexSystems.
Send ChexSystems Verification Letter 2 to request actual copies of documentation from ChexSystems supporting the accuracy of the negative item.
At the same time, send Letter 4 to the original bank that filed the information with ChexSystems, which adds the burden of responsibility to the bank.
Both letters reference your rights as a consumer under the FCRA and the Fair Debt Collection Practices Act. Remember, these letters must be sent certified mail with the return receipt requested and you should also save copies for your files.
Step 4: Handling No Response from ChexSystems
If you DON’T hear back from ChexSystems within the 30-day time frame, send Letter 3 to ChexSystems. This gives a firm warning to delete the information since their lack of responsiveness is in violation of the FCRA.
In this scenario, you should also send Letter 4 to the original bank requesting they send proof of your alleged transgression.
If the information on your report can be verified by either ChexSystems or the original bank, these steps may not remove the negative item from your report for more than a few days.
You may be able to open a checking account during the time when the information is removed. However, you run the risk of later having your account frozen if the bank later performs a ChexSystems sweep of all existing accounts.
This isn’t unheard of and may not be worth the additional risk of temporarily losing access to your funds.
How to Fix Accurate Negative Items On Your ChexSystems Record
The tips above focus on getting errors removed from your report or having negative items removed based on technicalities throughout the filing process.
But even if everything is accurate and both ChexSystems and the bank or credit union responded to your requests for proof exactly as they should have, you can still work on rectifying your report.
If you owe money to any ChexSystems member institutions, do your best to get those paid off. You can even negotiate to pay less than what you owe.
When negotiating the payoff process, ask the creditor to update the information in ChexSystems. This is to indicate that the debt has been paid. As always, be sure to keep copies of all the paperwork documenting the payoff.
As a last resort, remember that patience is key. All negative items on ChexSystems typically go away after five years.
In the meantime, check out our listing of banks and credit unions that approve account holders without consulting ChexSystems.
There’s a healthy mix of both checking and savings accounts, with plenty of options to choose from. Even if you are in the ChexSystems database for the next few years, you can still access the financial tools you need to manage your money.
Opening a Checking Account Without ChexSystems
While most banks and credit unions use ChexSystems or another consumer reporting agency, there are several that offer what’s called second-chance banking.
These financial institutions either don’t check your ChexSystems record at all, or they’re willing to look past some negative items. National examples include:
Capital One 360
You may also have luck finding second-chance banking opportunities with regional and local banks and credit unions. Call the institution directly to determine what your options are.
Issues with your ChexSystems report can cause problems if you need a new bank account. But fortunately, you’re not without options.
By getting a copy of your ChexSystems record and addressing the problems that are preventing you from getting approved, you can improve your odds for the next time you apply.
Also, consider getting a free copy of your credit report and check your credit score. These may not help with getting a bank account. You need to know where you stand and working to improve your credit history can help.
Your ChexSystems record is, in many ways, more important than your credit report (or even improving your credit score) because it allows you to access the standard banking system.
Ensuring your report is free of errors and in good standing will ensure that you get the financial products you need.
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